THIS PAYMENT AGREEMENT (this “Agreement”) is between UFOOD RESTAURANT GROUP, INC., a corporation organized under laws of the State of Nevada, with offices located at 255 Washington Street, Suite 100, Newton, Massachusetts 02458, (hereinafter referred to as the “Company”), and SUMMIT TRADING LIMITED, an international business organized under the laws the Commonwealth of The Bahamas, with a mailing address of Charlotte House, P.O. Box N-65, Charlotte Street, Nassau, Bahamas (hereinafter referred to as the “STL”).
WHEREAS, STL is in the business of assisting public companies with short and long term funding sources, strategic business planning, and investor and public relations services designed to make the investing public knowledgeable about the benefits of stock ownership in the Company; and
WHEREAS, the Company has had presented to it one or more plans of public and investor relations to utilize other business entities to achieve the Company’s goals of making the investing public knowledgeable about the benefits of stock ownership in the Company; and
WHEREAS, STL has advised the Company that STL is not in the business of stock brokerage, investment advice, activities which require registration under either the Securities Act of 1933 (hereinafter the “Act”) or the Securities and Exchange Act of 1934) (hereinafter the “Exchange Act”), underwriting, banking, is not an insurance company, nor does it offer services to the Company which may require regulation under federal or state securities laws; and
WHEREAS, the parties agree, after having a complete understanding of the services desired to be provided to the Company and Company desires to have STL fund a plan of public and investor relations which have been selected by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Duties and Involvement.
The Company has engaged STL to provide a plan, and for coordination in executing the agreed-upon plan, for using various investor and public relations services as agreed by both parties (the “Plan”). After agreeing upon the Plan, the Company desires to have STL undertake to pay its monetary obligations to fund the costs of coordinating the financial and public relations services contemplated by the Plan. STL in return for the compensation hereinafter described has agreed to undertake to pay the Company’s obligations with respect to coordinating the Plan.
2. Relationship Among the Parties; Representations.
STL acknowledges that it is not an officer, director or agent of the Company, it is not, and will not, be responsible for any management decisions on behalf of the Company, and may not commit the Company to any action. The Company represents that STL, through stock ownership
or otherwise, does not have the power to either control the Company or to exercise any dominating influences over its management.
STL shall perform all services under this Agreement as an independent contractor and not as an employee or agent of the Company. STL is not authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the Company or to bind the Company in any manner. STL shall be responsible for payment of all taxes on its income or activities, and the Company shall not withhold any federal, provincial, state, or local payroll or employment taxes from any fees or other amounts payable under this Agreement unless the Company determines that such withholding is required under applicable law or regulation. STL shall comply with any and all federal and state securities laws, regulations and orders in connection with its provision of services under this Agreement.
The Parties represent and warrant that: (i) each is a company duly organized and existing under the laws of the state in which each is incorporated identified above in the preamble; (ii) each has the full right, power and authority to execute this Agreement and to perform the obligations hereunder; (iii) this Agreement constitutes and will constitute the valid and binding obligation of the Parties enforceable in accordance with its terms; (iv) the individual executing this Agreement on each Party’s behalf has been duly authorized to do so; and (v) STL has the expertise and experience to perform the services set forth herein in accordance with the terms of this Agreement.
3. Effective Date, Term and Termination.
This Agreement shall be effective on June 29, 2010 and will continue until June 29, 2011. Notwithstanding the foregoing, the Company in its sole discretion upon fifteen (15) days advance written notice may terminate this Agreement effective December 29, 2010, in which event STL shall promptly return one-half of the Payment (as defined herein) to the Company.
The Company agrees to pay STL, or its designee certified in writing to the Company, as follows: ten thousand (10,000) shares of the Company’s to be issued as Series B 8% Redeemable Convertible Preferred Stock, par value $.0001 per share (“Series B Preferred Shares”), such Series B Preferred Shares to have a Stated Value of $1,000,000 as provided by the Certificate of the Designations, Powers, Preferences and Rights of the Series A 8% Redeemable Convertible Preferred Stock and Series B 8% Redeemable Convertible Preferred Stock to be filed with the State of Nevada pursuant to the Company’s private placement of Series B Preferred Shares commencing on or about June 29, 2010 (the “Offering”) (collectively referred to herein as “Payment”).
This Payment will be considered total and complete consideration for STL performing its duties and involvement as defined in Section 1, of this Agreement. The Payment shall be deemed earned upon the signing of this Agreement and shall be issued to STL on the same terms and conditions as offered to subscribers of the Offering. Upon issuance of the Series B Preferred Shares to STL, the Company shall have no further payment obligations to either STL.
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The Company agrees to pay for all costs and expenses incurred and associated with its employees’ working with STL and its representatives, including lodging, meals and travel as necessary and additionally, agrees to pay the cost of printing, due diligence shows, email, radio, television and other outside services that it approves in writing in conjunction with STL or any other third party introduced to the Company to execute any portion of any Plan proposed and agreed to. STL shall be responsible for the out-of-pocket expenses, e.g., travel and lodging, of its own personnel.
5. Investment Representations.
(a) The Company represents and warrants that it has provided STL with access to all information available to the Company concerning the Company’s condition, financial and otherwise, its management, its business and its prospects. The Company represents that all of the reports required by the Act or the Exchange Act have been filed with the Securities and Exchange Commission (“Commission”) and are available online on the Commission’s EDGAR portal (the “Disclosure Documents”). STL acknowledges that the acquisition of the Series B Preferred Shares involves a high degree of risk. STL represents that it-and its advisors-have been afforded the opportunity to discuss the Company with its management. The Company represents that it will provide STL at its request with any information or documentation necessary to verify the accuracy of the information contained in the Disclosure Documents and will promptly notify STL upon the filing or any registration statement or other periodic report filed (“Reports”) pursuant to the Act or the Exchange Act at least 24 hours prior to filing such Reports. The Company will also provide STL with Security Position Reports as provided through Depository Trust & Clearing Corporation on a bi-weekly basis and any transfer activity forms delivered to the Company by its transfer agent within 5 days after STL’s request, which requests to be made on a periodic basis after discussion with the Company.
(b) STL represents that neither it nor its officers, directors, or employees are subject to any disciplinary action by either the Financial Industry Regulatory Authority or the Commission by virtue of any violations of their rules and regulations and that to the best of its knowledge neither is its affiliates nor subcontractors are subject to any such disciplinary action.
(c) If required by United States law or regulation, STL will take necessary steps to prepare and file any necessary forms to comply with the transfer of the shares of stock from Company to STL, including, if required, Form 13(d).
(d) STL represents and warrants to the Company as follows:
(i) The Series B Preferred Shares, and the Common Shares underlying the Series B Preferred Shares, are being acquired by STL for its own account, and not on behalf of any other person, and are being acquired for investment purposes and not for distribution.
(ii) The Series B Preferred Shares are a suitable investment for STL, taking into consideration the restrictions on transferability affecting the Series B Preferred Shares and the Common Shares.
(iii) The Series B Preferred Shares to be received by STL will be acquired for investment for STL’s own account and not with a view to the distribution of any part thereof, and
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that STL has no present intention of selling, granting any participation in, or otherwise distributing the same in a manner contrary to the Securities Act of 1933, as amended (the “Securities Act”) or applicable state securities laws.
(iv) STL is and has experience as an investor in securities of companies, and acknowledges that the securities to be acquired hereunder are speculative and involve a high degree of risk. STL can bear the economic risk of its investment, including possible complete loss of such investment, for an indefinite period of time and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the securities purchased hereunder. STL understands that the securities to be acquired hereunder have not been registered under the Securities Act, or under the securities laws of any jurisdiction, by reason of reliance upon certain exemptions, and that the reliance on such exemptions is predicated upon the accurac